Qatar’s intraregional travel, tourism and real estate sectors will benefit the most, lifting the prospects of the insurance sector, as the end of blockade will improve political and economic co-operation within the Gulf Co-operation Council (GCC) region, according to Standard & Poor’s (S & P), a global credit rating agency.
’The restoration of ties between Qatar and the four Arab countries previously boycotting the country will improve political and economic co-operation within the GCC region,” the credit rating agency said.
Expecting the resolution of the boycott to support improvement in the region’s broader business and investment environment; S & P said Qatar’s intraregional travel, tourism, and real estate sectors will benefit most, although the impact on bilateral trade could be marginal.
Another economic think-tank Oxford Economics had recently said full rapprochement would also offer potential economic benefits to support the post-Covid recovery, particularly in Qatar.
“Although the Qatari economy has adapted well to the economic consequences of the blockade, a rebound in visitor numbers from the rest of the GCC would provide a timely boost when travel restrictions are eased and help with a successful 2022 FIFA World Cup,” it said.
Trade between member states is relatively limited given the almost uniform concentration of GCC member states’ exports on hydrocarbons and the lack of strong agriculture or manufacturing sectors in the region, S & P highlighted.
“Our stable outlook on Qatar currently indicates our view that, despite lacklustre growth prospects and still-low hydrocarbon prices, Qatar’s credit profile will remain resilient, supported by its wealthy economy, and strong government and external net asset positions,” it said.
The rating agency said the reopening of their airspace as well as sea and land borders in an effort to end the longstanding diplomatic dispute could have a “positive” effect on the business growth and investment returns of Qatari insurers in the medium term.
Over time, Qatari insurers are likely to benefit from more regional travel, tourism, and possibly trade, which could lead to an increase in insurable risks and consequently premium income, according to S & P.
“More foreign investment could also improve Qatari insurers’ asset prices and investment returns, since most of their investments are held in Qatar and investment income is a key contributor to their overall earnings,” it said.
Oxford Economics is of the view that more harmony in the GCC would boost the region’s attractiveness to foreign investors as the global economy recovers. “The upside potential is greater for Qatar, but benefits could accrue in the rest of the region too,” it added.